Anticipated fiscal policy and adaptive learning

George W. Evans, Seppo Honkapohja, Kaushik Mitra

Research output: Contribution to journalArticlepeer-review

26 Citations (Scopus)

Abstract

The impact of anticipated policy changes when agents form expectations using adaptive learning rather than rational expectations is considered. Agents are assumed to combine limited structural knowledge with a standard adaptive learning rule. These issues are analyzed using two well-known set-ups, an endowment economy and the Ramsey model. In our scenario there are important deviations from both rational expectations and purely adaptive learning. The approach could be applied to other frameworks.
Original languageEnglish
Pages (from-to)930-953
JournalJournal of Monetary Economics
Volume56
Issue number7
Early online date26 Sept 2009
DOIs
Publication statusPublished - Oct 2009

Keywords

  • Taxation
  • Expectations
  • Ramsey model

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